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Gov. Douglas signs housing, land use bill into law

On Wednesday, May 28th, Gov. Jim Douglas signed into law H.863, the comprehensive housing and land use bill passed by the Legislature on the final day of the 2008 session.

Wednesday's signing ceremony marked the end of more than two years of work by VHFA and several housing partners, along with the administration, legislators and interest groups ranging from Smart Growth Vermont and the Vermont Natural Resources Council to the Vermont League of Cities and Towns and the Vermont Bankers' Association.

The central goal of the new legislation is to encourage communities to practice smart growth when locating housing development.

H.863 began life in the 2007 legislative session as H.299, an administration initiative to relax environmental rules on development in certain specifically-designed areas, originally referred-to as "new neighborhoods" and eventually being called "Vermont neighborhoods." Many legislators and interest groups opposed that bill, and a competing measure, H.455. Neither bill passed the Legislature, and a group of stakeholders, led by Greg Brown, Executive Director of the Chittenden County Regional Planning Commission and including VHFA, began meeting during the summer and fall following the end of the session to hammer out a compromise that became H.863.

Through a deliberate and occasionally contentious process, H.863 became a more comprehensive bill, with provisions that include:

Allowing communities to create Vermont Neighborhoods, areas chosen for housing development. These neighborhoods must be served by public water and wastewater infrastructure, must be located within or close to a downtown and must include a certain percentage of housing that meets price guidelines developed from VHFA purchase price standards. Towns applying for Vermont Neighborhoods must have a town plan and zoning and subdivision regulations.

Creating a new $100,000 affordable housing tax credit for development of homeownership. The current state tax credit is only available to developers of multi-family rental housing.

Increasing the Property Transfer Tax exemption for VHFA borrowers to $110,000 of the purchase price and extends that to people using USDA/Rural Development or HOME financing.

Raising the current level of moral obligation of the state backing VHFA bonds from the current $125 million to $155 million and allowing VHFA to partner with the state Treasurer's office and the Pension Board that would allow the Agency to borrow money directly or sell bonds to the pension system to lower the Agency's cost of borrowing.